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Philippines: GDP rebounds in Q2 but low base effect flatters growth

Christian Fernsby |
The economy bounced back in the second quarter, with GDP expanding 11.8% in annual terms and contrasting Q1’s 3.9% decline.

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Q2’s rebound put an end to a five-quarter streak of falling output and came above market analysts’ expectations of a 10.0% increase. However, the reading was largely due to a low base effect.

Household spending grew 7.2% year-on-year in the second quarter, which marked the best result since Q3 2016 (Q1: -4.8% yoy). Moreover, fixed investment swung to expansion, rising 37.4% following the 18.0% decline tallied in the prior quarter. Meanwhile, government consumption slid 4.8%, logging the first contraction since Q3 2014 (Q1: +16.1% yoy).

On the external front, exports of goods and services skyrocketed 27.0% year-on-year in the second quarter, improving significantly from Q1’s 8.8% tumble. Similarly, imports of goods and services posted a stellar expansion of 37.8% in the second quarter (Q1: -7.0% yoy), further highlighting firming domestic demand.

Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, GDP returned to contraction in Q2, declining 1.3% following the 0.7% growth logged in the previous quarter, and marking the worst reading in a year.

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